Labour claims that the Tory plans would undermine the economic recovery and the party went on the attack after the Telegraph letter was published, with Lord Mandelson, the business secretary accusing the Tories of "peddling a deception on businesses", and the chancellor, Alistair Darling suggesting that the businessmen take a "long, hard look" at Conservative proposals, rather than accepting "flimsy advice".

But after two of the signatories – Kingfisher chief executive Ian Cheshire and Next boss Simon Wolfson – had rubbished the idea that they had been deceived by the Conservatives, the seven business groups released an open letter adding their support to the Tory plans.

It stated: "We applaud the decision by a number of Britain's most senior business leaders to take a public stand against the planned rise in national insurance – which is a clear and unequivocal tax on jobs.

"Recent proposals by the Conservatives to reduce the negative impacts of the rise on companies and their hard-working employees deserve some credit.

"Given that all political parties are counting on the private sector to drive future economic growth, it is only right to look for ways to improve the business environment through cost savings across the public sector."

Earlier, Cheshire said it was "patronising to suggest that we've been deceived" and that the rise in national insurance amounted to a "tax on jobs".

Wolfson said in a statement: "The principle is a very simple one. It is question of: do we pay for government profligacy through increased taxes or do we urge them to save money in a way that businesses have?"

Lord Jones, the former trade minister and head of the CBI, also waded into the row, hitting out at Mandelson for turning the issue into a "party political spat".

Labour's response to the Telegraph letter came as it unveiled a dossier detailing what it said was a £22bn "credibility gap" in the Conservatives' spending plans. Mandelson suggested the Tories would turn to the "age-old Tory tax hike" of VAT to pay for its unfunded promises.

Cameron, on a visit to a B&Q depot in Middlesex, said he had no plans to increase VAT and added that the support from business leaders proved that it was Labour that had a "credibility gap".

Earlier, in an interview on BBC Radio 4's Today programme, the Tory leader accepted that he had not full explained how it would "fill the hole" in the nation's finances but said the hole in Labour's plans was even bigger because the government had said less about what it would cut.

"This opposition has gone further than any in living memory in terms of setting out tough choices in advance," he said.

Cameron welcomed the letter to the Telegraph as "a very important moment in the election campaign".

As Labour and the Tories traded blows, Vincent Cable, the Lib Dem Treasury spokesman, said they were "as bad as each other".

"Whether it's for tax cuts or filling in the deficit hole, both parties seem to be in a competition to see who can come up with the least credible cuts," he said.

"While Labour resorts to sending home sick nurses, the Tories can't even tell you what departments their cuts will be made in.

"The Liberal Democrats have an honest and credible plan to tackle the deficit and a fully costed tax plan to put £700 back in the pockets of average workers."

The open letter issued by the business groups was signed by David Frost, director-general, British Chambers of Commerce; Stephen Robertson, director-general, British Retail Consortium; John Cridland, deputy director-general, Confederation of British Industry; Phil Orford, chief executive, Forum of Private Business; John Walker, national chairman, Federation of Small Businesses; Miles Templeman, director-general, Institute of Directors; and Kevin Green, chief executive, the Recruitment and Employment Confederation.